AIFM passporting in Cyprus

AIFMs authorised in their EEA home State may exercise passport rights for the management and marketing of most types of AIFs in Cyprus on a services and / or branch basis. In order to do so, EEA AIFMs are required to satisfy certain notification and marketing organisation requirements. 

Regardless of whether an existing passport to conduct management business under another single market directive (such as UCITS) is held, EEA AIFMs are required to make a separate notification to their home State competent authority if they intend to manage or market an EEA AIF on a passported basis. The home State competent authority will send the management passport notification to the CySEC on behalf of the EEA AIFM. 

In order to exercise a branch passport right in Cyprus, EEA AIFMs will not need to comply with any additional requirements, other than those provided under Article 33 of the AIFMD. 

In the case of an EEA AIF targeting professional investors in Cyprus, it may do so under observance of the AIFMD notification procedure, in order to obtain access to the Cypriot market, and observance of the local marketing requirements laid down in the CySEC Marketing Directive, in order to lawfully carry out marketing activities in Cyprus. 

A full scope EEA AIFM may also market a Cypriot AIF, or EEA AIF  1 Subject to the Cypriot AIF or EEA AIF not being a feeder AIF, the master AIF of which is managed by a non-EEA AIFM or is a non-EEA AIF.  to retail (alongside professional) investors in Cyprus may do so, provided the following conditions are met: 

• In the case of an EEA AIF, prior authorisation for marketing to retail investors has been received by the CySEC and the AIF at issue is not an unregulated AIF; and 
• In the case of a Cypriot AIF, such AIF must have been authorised by the CySEC as eligible for marketing to retail investors. The extent of such eligibility will depend on the regulatory categorisation of the AIF upon its authorisation. 

An EEA AIFM can engage in pre-marketing of an AIF in Cyprus to the extent that the information provided to potential professional investors: 

• does not enable such investors to commit to acquiring units or shares of a particular AIF; and  
• does not amount to a subscription form or similar document, whether in draft or final form; and 
• does not amount to constitutional documents, a prospectus or offering documents of a not-yet-established AIF in a final form. 

Where a draft prospectus or offering documents are provided, these should not contain information sufficient to allow investors to take an investment decision and should clearly state that they do not constitute an offer or an invitation to subscribe to units or shares of an AIF and that the information presented therein should not be relied upon because it is incomplete and may be subject to change. 

An EEA AIFM who engages in pre-marketing in Cyprus must ensure that investors do not acquire units or shares in an AIF through pre-marketing and that investors contacted as part of pre-marketing may only acquire units or shares in that AIF provided the applicable marketing procedures under the AIFMD are followed. Furthermore, for a period of 18 months after the start of the pre-marketing of the AIF, any subscription by Cyprus-based professional investors should be considered to be the result of marketing and therefore subject to the applicable marketing procedures under the AIFMD. 

The EEA AIFM is not required to notify CySEC of the content or of the addressees of pre-marketing, or to fulfil any conditions or requirements other than those set out above, before it engages in pre-marketing. An EEA AIFM will, under its home state implementation of the Directive (EU) 2019/1160, be subject to an obligation to notify the competent   However, the AIFM Act empowers CySEC to request further information on pre-marketing actions taken or taking place in Cyprus from the home Member State of the AIFM.  

Lastly, an EEA AIFM must ensure that any pre-marketing activities in Cyprus are adequately documented. 

No equivalent rules apply in relation to pre-marketing conducted by Non-EEA AIFMs in Cyprus. 

AIFMs based in NonEEA jurisdictions wishing to market AIFs to professional investors in Cyprus will be required to comply with requirements, under the AIFM Act, and additional national private placement rules. The AIFMD requirements transposed by the AIFM Act comprise NonEEA jurisdiction FATF compliance, regulators’ cooperation arrangements and compliance with the transparency, disclosure, reporting and private equity provisions, where applicable. The additional national rules, laid down in the CySEC Marketing Directive, require the NonEEA AIFM to be licensed in its home jurisdiction and to submit a relevant notification to the CySEC, in which its licensing and AIFMD compliance (as set out above) are certified. Following such notification, marketing to professional investors in Cyprus can commence. 

The MiniAIFM Law was recently enacted creating a regime for the regulation and licensing of subthreshold AIFMs based in Cyprus. However, MiniAIFMs do not benefit from the passporting regime. 

Cyprus does not charge an application or notification fee for inward AIFMD passport notifications unless such application relates to marketing by a nonEU AIFM or to the marketing of units of a nonEU AIF. Applications relating to marketing to retail investors in Cyprus will attract an application fee to CySEC. EEA AIFMs passporting into Cyprus on a branch basis are not required to pay periodic fees on the regulated activities they conduct in Cyprus. 

Recently, the Directive (EU) 2019/1160 with regard to crossborder distribution of collective investment undertakings was transposed into local legislation by way of amendment of the AIFM Act. As relevant to the present purposes, the transposition: 

• Introduces clear rules relating to EEA AIFMs engaging in premarketing in Cyprus; and 
• requires EEA AIFMs, intending to market units or shares of an AIF to retail investors in Cyprus, to make facilities available for the performance of certain tasks by retail investors.